Analysis: D.C., California, New York have most progressive income taxes

California, Connecticut, New York, New Jersey and Washington, D.C., ranked among the U.S. jurisdictions with the most progressive individual income tax systems, according to a recent Tax Foundation analysis.

Thirty-three states and the District of Columbia have income tax systems with brackets for different levels of income, the Tax Foundation said, but California, Connecticut, New York, New Jersey and the District of Columbia were found to have at least six tax brackets, each with broad income ranges, and top marginal thresholds on income of between $500,000 and $1 million.

Washington, D.C., has six tax brackets, with the top income threshold reaching $1 million.

Among the states with income tax rates that increase with income level, the number of brackets and top rates vary substantially, the study found.

Four states – New York, Connecticut, Arkansas and Nebraska – require many of their top income earners to pay the top tax rate on all their income, not just their marginal income that exceeds a certain threshold, according to the Tax Foundation study.

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How Do States With Progressive Income Taxes Measure Up?

State

Number of Brackets

Top Income Threshold

Alabama

3

$3,000

Arizona

5

$155,159

Arkansas (a) (b)

6

$35,099

California (b)

10

$1,000,000

Connecticut

7

$500,000

Delaware

6

$60,000

Georgia

6

$7,000

Hawaii

12

$200,000

Idaho (b)

7

$11,043

Iowa (b)

9

$71,910

Kansas

3

$30,000

Kentucky

6

$75,000

Louisiana

3

$50,000

Maine (b)

3

$50,000

Maryland

8

$250,000

Minnesota (b)

4

$160,020

Mississippi

3

$10,000

Missouri

10

$9,072

Montana (b)

7

$17,900

Nebraska (b)

4

$30,420

New Jersey

6

$500,000

New Mexico

4

$16,000

New York

8

$1,077,550

North Dakota (b)

5

$424,950

Ohio (b)

7

$213,350

Oklahoma

6

$7,200

Oregon (b)

4

$125,000

Rhode Island (b)

3

$149,150

South Carolina (b)

5

$14,650

Vermont (b)

5

$416,650

Virginia

4

$17,000

West Virginia

5

$60,000

Wisconsin (b)

4

$247,350

Washington, D.C.

6

$1,000,000

(a) Brackets apply to individuals earning more than $75,000. Two special rate schedules exist for low- and middle-income individuals: one for individuals below $21,000 in income (which has four brackets), and one for those between $21,000 and $75,000 in income (which has six brackets). (b) Bracket levels are adjusted for inflation each year.

Source: Tax Foundation; state tax forms and statutes; Bloomberg BNA

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